New business owners consider Tijuana incentives

TIJUANA — For some San Diegans, the land of opportunity lies in Tijuana.

“There’s so much good talent, and the costs of doing business are so much lower,” said Alex Pulido of Chula Vista, who is looking to start a technology services company south of the border.

Tijuana in particular and Mexico in general are extending numerous incentives designed to attract new business from the United States. Tijuana’s proximity to American consumers can make it appealing for foreign investment, along with tax breaks and free consulting from the municipal government and private sector.

A few business owners gathered Wednesday for a workshop organized by the Tijuana Economic Development Corporation to hear about those potential benefits — as well as the legal and regulatory differences involved in running a company in the U.S. versus in Mexico.

The panel session took place during the Tijuana Innovadora expo, an 11-day promotional event whose major goals include encouraging more U.S. entrepreneurs and investors to start operations in the city.

Manlio Correa, an expo attendee, was hoping the session could help him avoid repeating mistakes.

Correa, who runs a business consulting firm in San Diego, used to own a hostel in Tijuana. He had a partner in the Tijuana business, but no written contract. When the relationship soured, the partner found it easy to push out Correa.

Now Correa wants to start a new venture. “I’m developing another business — tourism services — and I want to reopen the hostel,” he said.

In the past, Mexico’s incentive structure didn’t target small businesses such as Correa’s and Pulido’s. It provided significant exemptions on import and export duties to spur the development of manufacturing, Flavio Olivieri, executive director of the Tijuana EDC, said in an interview after the Innovadora panel.

The program has been a success, he said, and Tijuana is a leading hub in Mexico for electronics and other manufacturing.

In recent years, the city and the state of Baja California also have courted smaller-scale suppliers and service firms to support those manufacturers, said Fernando Cervantes, secretary of the Tijuana EDC.

“They can take tax breaks on investment, depending how much technology they’re bringing in,” Olivieri said. “They can get five years’ discount on payroll tax.”

There’s also a tax break for training employees, and both the city of Tijuana and the Tijuana Chamber of Commerce provide consulting and other advice to people looking to launch a small business.

At Wednesday’s session, the panelists explained distinctions between American and Mexican law that could be useful for business owners.

For example, Mexican employees are entitled to a 10 percent share of their companies’ profits, proportional to their annual salary. Also, all Mexican workers get a contract and cannot be fired “at will,” as is the case in California. But there’s not much of a union presence in Mexico.

The presenters also said Mexico’s environmental laws are similar to those in most Western countries, but they’re not as strict as California’s.